GBTC Discount Narrows 42% as Grayscale-SEC Showdown Nears

by

• Grayscale’s lawsuit against the US Securities and Exchange Commission (SEC) is set to go to oral arguments today.
• The case revolves around Grayscale Bitcoin Trust (GBTC), the world’s largest bitcoin fund, which has been trading at a steep discount for two years.
• Prior to the argument, GBTC’s discount to net asset value has narrowed from 47.35% to 42.11%.

Grayscale’s Lawsuit Against SEC

Grayscale has filed a lawsuit challenging the US Securities and Exchange Commission (SEC). The central point of contention is Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin fund, which has been trading at a deep discount for two years. Today, oral arguments will be heard in this case.

The GBTC Discount

According to data from YCharts, prior to this hearing, GBTC’s discount relative to its net asset value had decreased from 47.35% to 42.11%. This could reflect investors’ confidence that Grayscale will win its legal battle against the SEC. In October 2021, Grayscale applied to convert GBTC into an exchange-traded fund (ETF), but was rejected by the regulatory agency. Subsequently, they chose to sue the SEC last summer. GBTC holds $14.8 billion worth of assets and is capable of introducing liquidity if it converts into an ETF as proposed by Grayscale .

SEC’s Position

The SEC has previously approved multiple crypto products backed by futures but consistently denied spot ones like those proposed by Grayscale in their ETF application for GBTC. Despite being turned down initially, Grayscale decided to take on a legal battle with the regulator in order for their plans for GBTC conversion into an ETF can come through as expected .

Narrowing Of Discount

The narrowing of GBTC’s discount could be because investors are optimistic that this lawsuit may end up in favor of Grayscale. If so, then it would result in huge gains for them due to reduced discounts associated with more liquid markets such as those created by an exchange-traded fund structure .

Conclusion

The outcome of this litigation between Grayscales and the SEC will have far reaching implications on both companies involved as well as on crypto markets worldwide . As it stands now , there is much anticipation surrounding this case which will be heard today .